The Statutory Cooling-Off Period in South Australia
Under the Land and Business (Sale and Conveyancing) Act 1994 (SA), a purchaser of residential property has a two-business-day cooling-off period commencing from the time the contract is signed. During this period, the purchaser may rescind the contract by serving written notice on the vendor or the vendor's agent. If the purchaser exercises this right, the vendor is entitled to retain 0.2% of the purchase price as a termination fee, but is not otherwise entitled to damages. The cooling-off right exists as a protection for consumers who may feel pressured into signing contracts at auctions or open inspections, and its existence cannot be waived or contracted out of by agreement between the parties.
The cooling-off period is measured in business days, not calendar days. Saturdays, Sundays, and public holidays do not count. If the contract is signed on a Friday afternoon, the cooling-off period does not expire until the close of business on the following Tuesday (assuming Monday is not a public holiday). Notice of rescission must be in writing and served within that period. It is prudent to serve any notice of rescission in a way that creates a clear record of the time and method of service.
Important Exceptions: When the Cooling-Off Period Does Not Apply
The cooling-off right under the Act does not apply in all circumstances. Most significantly, it does not apply to properties sold by auction – if you purchase at auction, you are bound by the contract from the moment the hammer falls, with no cooling-off period. The cooling-off right also does not apply where the purchaser is a corporation, where the property is of a commercial or industrial nature, or where the purchaser has waived the right with the benefit of independent legal advice as evidenced by a certificate from the purchaser's solicitor or conveyancer. The "lawyers certificate" waiver is commonly used in circumstances where both parties want to proceed to an immediate exchange without the uncertainty of a cooling-off period – for example, in competitive multi-offer situations.
It is also important to note that the cooling-off period is a right of rescission only – it is not a period during which the contract is conditional. The contract is binding from the moment of signing, and neither party can simply ignore their obligations during the cooling-off period on the assumption that the purchase will not proceed. If the purchaser does not rescind within the cooling-off period, the contract becomes fully binding on both parties.
Practical Advice for Purchasers
The two-business-day cooling-off period is very short, and there is limited time to have the contract reviewed, arrange a building inspection, or make inquiries about title. We strongly recommend engaging a solicitor or conveyancer before you sign any contract, not after. If you have signed a contract and wish to exercise the cooling-off right, contact your solicitor immediately to ensure the rescission notice is correctly drafted and served within time. Losing the cooling-off period through a procedural error or a misunderstanding of when it commenced can have significant financial consequences. The 0.2% termination fee – approximately $2,000 on a $1,000,000 purchase – is a modest cost compared to being locked into a purchase that no longer suits your circumstances.